The Obama administration gave another break to people losing their existing health insurance late Thursday, offering an exemption for those who want to buy the extremely cheap, bare-bones plans known as catastrophic coverage, and lifting the threat of a tax penalty if they fail to have any coverage in 2014.
It's the latest in a series of last-minute concessions being made by federal officials harried by complaining consumers as the days tick down to Jan. 1, 2014 and the last deadline for getting health insurance for the new year.
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Senior administration officials who declined to be named estimate that about 500,000 people may be affected. These are people who had bought their own private insurance coverage whose plans are not being renewed for 2014, and who have not yet made other insurance arrangements.
"If you have been notified that your individual market policy will not be renewed, you will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage," the Centers for Medicare and Medicaid Services says in a new statement posted on its website.
Some people have complained that the new insurance policies, written to comply with the 2010 Affordable Care Act, cost more than their old policies. The administration and outside health experts argue this is because the old policies didn't provide much coverage. The law forces insurers to pay for cancer screenings, birth control, vaccinations and other basic services they may not have covered before.
The insurance industry, which is counting on the Obamacare requirement that most Americans carry non-catastrophic plans to protect its bottom lines as it sells more-expensive Affordable Care Act plans, reacted negatively to the latest in a series of concessions it has been forced to swallow.
And there was speculation by health-care reform observers that the suspension of the so-called individual mandate for this relatively small class of people would open the door to a total suspension of the rule for all Americans.
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Health and Human Services Secretary Kathleen Sebelius describes the individual insurance market as "volatile" in a letter to Virginia Sen. Mark Warner outlining the latest policy change. "Even though the Affordable Care Act will offer more coverage choices and protections for millions of Americans, we are committed to ensuring the smoothest transition possible for those who need to find a new health plan," she writes.
So CMS says some people can have exemptions.
"If you believe that the plan options available in the Marketplace in your area are more expensive than your cancelled health insurance policy, you will be eligible for catastrophic coverage if it is available in your area," the CMS says. "In order to purchase this catastrophic coverage, you need to complete a hardship exemption form, and indicate that your current health insurance policy is being cancelled and you consider other available policies unaffordable."
"Like all individuals who get a hardship exemption in 2014, these individuals will be eligible to buy a catastrophic plan but even if they do not they will not be subject to a penalty. The hardship exemption is included in the law because we recognize that there are certain temporary circumstances that could make it difficult for individuals to afford any health coverage," an administration spokesperson said.
"But keep in mind - these are people who had coverage and want to remain covered and now we are giving them more options to do so," the spokesperson added.
Health and Human Services Department spokeswoman Joanne Peters said it's a "common sense clarification". "For the limited number of consumers whose plans have been cancelled and are seeking coverage, this is one more option," she said.
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Insurers were unhappy. "This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," said America's Health Insurance Plans' (AHIP) President and CEO Karen Ignagni.
The administration has pushed back deadlines and softened rules for people who are trying to buy health insurance before the end of the year.
A week ago, federal officials gave people struggling to buy health insurance until Dec. 31 to pay their first premiums for coverage starting the very next day, and asked insurance companies to extend other deadlines, too. Health insurers have since offered to extend this time until Jan 10.
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HHS also formalized an eight-day extension that gives people until Dec. 23 to sign up for coverage that will start Jan. 1. Earlier in the year, HHS delayed by a year a mandate requiring employers to provide health insurance.
The health insurance exchanges are meant to be the centerpiece of health reform, but the federally run exchange, working on behalf of 36 states, fell apart as soon as it went live. The administration has been scrambling to fix it but many users complain they still cannot sign up.
Senior administration officials told reporters that Jan. 1 will not be a holiday for people working the exchanges. They will have staff working at call-in centers — and say 800,000 staffers have been added, with 2,000 trained customer service reps across 17 sites nationwide.
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One official said the administration has sent out 2 million emails to people who may have experienced problems with the process, and officials have placed 600,000 phone calls to people to make sure they've gotten through the process.